Finally got some time to update my trading history page. Bought some Google and First Solar since end of April.
Google
Is there any indication that Google's business is declining? There's one answer to that question: No. The main reason is that the Internet is still growing. According to Internet World Stats, the Internet's penetration of the world is still only at around 30%. That's a long way to go to get to probably around 85%, where I think saturation will take place.
What's more important is that the Internet is reshaping the way the world operates. Not only will the number of users increase over time, the amount of money to be made on the Internet will continue to grow. For example, online video streaming is only in its infancy. Think Netflix and Youtube. They have been around for less than 10 years, and Blockbuster has become the first casualty. I have no doubt that cable TV as it is will disappear in about 20 years. People will still need to be entertained, but likely through some form of Internet service. This is the megatrend of the 21st century, ladies and gentlemen. By owning Google, you will be able to participate in this mega-growth!
First Solar
Renewable energy, another megatrend in the making. First Solar is the lowest cost solar panel maker, and also one of the largest in the world. Lots of profits and lots of cash, what more can you ask? Thanks to the Japanese Tsunami, nuclear has lost its popularity as an alternative to fossil fuel power generation. There will always be naysayers, but solar energy has already reached critical mass. Again, own this company and you will ride the wave.
Do You Have the Guts?
Half of the battle is finding the courage to buy the right stock. Anyone can feel good buying a stock that has just gone up 50%. But those who make money are the ones who have the guts to buy a stock after it has gone down 50%. Of course, you need to know that it's a good stock in the first place. Warren Buffet opens his wallet most often during times of calamity, when stock prices are driven down. You should learn to do the same. In order to have the guts, you need to have the conviction that your picks are good. Rule #1 Investing can help you do that. Start your journey here.
Showing posts with label Trades. Show all posts
Showing posts with label Trades. Show all posts
Sunday, June 26, 2011
Wednesday, June 8, 2011
Getting Back into True Religion (TRLG)
I'm starting to buy True Religion (Ticker: TRLG) again after selling a number of shares and also having my call option exercised. I will buying more if price drops below $25. Google Insights is showing good search volume, which I believe correlates with sales. Come join the party!
Saturday, June 4, 2011
I Bought Some First Solar (FSLR) Today! Part 2
This is going to be a reoccurring theme...buying First Solar on the cheap. As I try to stick to my stock allocation strategy, I can't help but keep wanting to buy more of First Solar. This stock is now 33% off from its 52-week high of $175. If you buy now and it rises back up to that point, you get a nice 48% gain. So, I decided to buy more today.
Why am I so confident in the stock? Here's why. First Solar reported its Q1 earnings on May 3, 2011. That is more than 4 months into the FY11. It reiterated its earnings per share guidance for the year of $9.25 to $9.75. First Solar has a pretty good record for beating analyst estimates, which don't deviate too much from the issued guidance. So, chances are First Solar will earn at least $9.25/share. At $118, this works out to be a forward P/E of 12.8, which is a very, very modest P/E ratio, considering it has been sitting near 20 for the past couple of years.
What if they miss estimates? How bad could they be? Let's say they miss by a full $1.25. That gives $8.00/share, which results in a P/E of 14.75, still below the current P/E of 17. I would say there's quite a bit of margin of safety here. Since the year is back-end loaded, I can somewhat foresee that the stock price will rise in the second half as Q2 and Q3 results are announced.
Moreover, I believe First Solar may actually beat the estimates. It earned $1.33/share in Q1, which beat estimates by $0.17/share. That is not really the important part. The important part is that they achieved this despite some difficulty. Their CFO, Mark Widmar, explained in the Q1 earnings call that "net sales for the first quarter were $567.3 million, down $42.5 million or 7% compared to the fourth quarter of 2010. The decrease was primarily driven by lower volumes as we allocated modules to system builds to meet contracted delivery schedules. Revenue recognition is expected for those volumes later in the year." What this means is that they had produced a number of panels, but they went to the system builds (large scale projects), where the customer doesn't pay until a certain milestone is achieved in the project. The product is out the door; they're simply waiting for the money to come rolling in.
First Solar also benefits from the fact that they are a systems builder. So, instead of just selling panels, they actually build solar farms using their own panels and sell the farms to operators. An analogy that can be used is this. There are 2 miners who operate gold mines. Miner A mines the gold and simply sell the gold bars at whatever price gold happens to be. He makes money, but margins are low. Miner B also mines gold, but he also has a jewellery wholesale operation. He signs contracts with Tiffany and the like at the beginning of the year and produces fine gold jewellery for them using the gold they have mined. Miner B is at an advantage because he is no longer selling a commodity. You can't go on the open market and buy a designer necklace at the current necklace price. There is no current necklace price for a designer necklace. Miner B is able to differentiate itself from competitors. He also has good visibility of what's coming down the pipeline. He already knows what the contracts call for and the prices at which the goods are sold. Therefore, First Solar's forecast carries more weight than pure panel makers. Pure panel makers make forecasts based on how many panels they can produce and a guess of what the average selling price (ASP) would be. If the ASP falls dramatically over the course of the year, the forecast would no longer be correct.
That said, First Solar is likely not immune to falling ASPs. If customers see a dramatic drop in ASPs, they may want to re-negotiate the price of the system. Customers typically aren't stupid either. This risk, however, is smaller than the risks that pure panel makers face.
Am I nervous about the dramatic decline in stock value of First Solar? Sure! Am I hopeful that it'll bounce back? Absolutely! In the game of stocks, we need to take out emotions, which often drive us to do irrational things. Let's try to keep our heads clear. In 12 months time, when First Solar is trading at $200, we would likely ask ourselves, why didn't we buy more when the stock was at $120?
Why am I so confident in the stock? Here's why. First Solar reported its Q1 earnings on May 3, 2011. That is more than 4 months into the FY11. It reiterated its earnings per share guidance for the year of $9.25 to $9.75. First Solar has a pretty good record for beating analyst estimates, which don't deviate too much from the issued guidance. So, chances are First Solar will earn at least $9.25/share. At $118, this works out to be a forward P/E of 12.8, which is a very, very modest P/E ratio, considering it has been sitting near 20 for the past couple of years.
What if they miss estimates? How bad could they be? Let's say they miss by a full $1.25. That gives $8.00/share, which results in a P/E of 14.75, still below the current P/E of 17. I would say there's quite a bit of margin of safety here. Since the year is back-end loaded, I can somewhat foresee that the stock price will rise in the second half as Q2 and Q3 results are announced.
Moreover, I believe First Solar may actually beat the estimates. It earned $1.33/share in Q1, which beat estimates by $0.17/share. That is not really the important part. The important part is that they achieved this despite some difficulty. Their CFO, Mark Widmar, explained in the Q1 earnings call that "net sales for the first quarter were $567.3 million, down $42.5 million or 7% compared to the fourth quarter of 2010. The decrease was primarily driven by lower volumes as we allocated modules to system builds to meet contracted delivery schedules. Revenue recognition is expected for those volumes later in the year." What this means is that they had produced a number of panels, but they went to the system builds (large scale projects), where the customer doesn't pay until a certain milestone is achieved in the project. The product is out the door; they're simply waiting for the money to come rolling in.
First Solar also benefits from the fact that they are a systems builder. So, instead of just selling panels, they actually build solar farms using their own panels and sell the farms to operators. An analogy that can be used is this. There are 2 miners who operate gold mines. Miner A mines the gold and simply sell the gold bars at whatever price gold happens to be. He makes money, but margins are low. Miner B also mines gold, but he also has a jewellery wholesale operation. He signs contracts with Tiffany and the like at the beginning of the year and produces fine gold jewellery for them using the gold they have mined. Miner B is at an advantage because he is no longer selling a commodity. You can't go on the open market and buy a designer necklace at the current necklace price. There is no current necklace price for a designer necklace. Miner B is able to differentiate itself from competitors. He also has good visibility of what's coming down the pipeline. He already knows what the contracts call for and the prices at which the goods are sold. Therefore, First Solar's forecast carries more weight than pure panel makers. Pure panel makers make forecasts based on how many panels they can produce and a guess of what the average selling price (ASP) would be. If the ASP falls dramatically over the course of the year, the forecast would no longer be correct.
That said, First Solar is likely not immune to falling ASPs. If customers see a dramatic drop in ASPs, they may want to re-negotiate the price of the system. Customers typically aren't stupid either. This risk, however, is smaller than the risks that pure panel makers face.
Am I nervous about the dramatic decline in stock value of First Solar? Sure! Am I hopeful that it'll bounce back? Absolutely! In the game of stocks, we need to take out emotions, which often drive us to do irrational things. Let's try to keep our heads clear. In 12 months time, when First Solar is trading at $200, we would likely ask ourselves, why didn't we buy more when the stock was at $120?
Thursday, May 26, 2011
Good Bargains Available!
There are currently some good bargains available. First, we have First Solar (Ticker: FSLR) which is getting hammered for no apparent reason, aside from just pessimism and bearishness. Google (Ticker: GOOG) is also seeing the $510s, also for no apparent reason. Fundamentals for both companies look great. Since I have already bought both of these companies recently, I will be holding out some more.
If FSLR drops below $105, I will start to buy aggressively. Same with GOOG if it nears $500. If you don't currently have either of these stocks, you may want to begin thinking about buying some.
If FSLR drops below $105, I will start to buy aggressively. Same with GOOG if it nears $500. If you don't currently have either of these stocks, you may want to begin thinking about buying some.
Tuesday, May 17, 2011
I Bought Some First Solar (FSLR) Today!
Good day! First Solar (Ticker: FSLR) seems to be finding a nice support around the $120-125 area. I bought some more shares today as I continue to take this as a great buying opportunity. I also recently started a naked put option on First Solar. See my trade history.
So what happens if it continues to fall? I'm buying more! Overall, Q1 has not been a nice quarter to a number of solar companies. Evergreen Solar (Ticker: ESLR) is on the brink of bankruptcy. So, the fallout is beginning! This is a good thing! Why? As I have said before, the smaller players will die out, leaving the field for a handful of larger players, such as First Solar. We know the solar sector will flourish in the current and next decade. Having stake in the best company in the industry will help you ride the wave.
Also of note, Sunpower (Ticker: SPWR) is being bought out by Total. This means well for the industry in general. If an oil company is investing in clean energy, you know it's got a future! Who knows, maybe some other company like Exxon or BP would be interested in First Solar? A takeover will send shares very high!
Friday, May 6, 2011
Volatile Stock: First Solar (FSLR)
First Solar reported earnings earlier this week. They beat estimates by about 15%, but investors weren't pleased with the outlook, which was the same as their guidance last quarter. Talk about illogical! Mr. Market is having big mood swings. It was less than 3 months ago that the stock hit $175. Now, it's $128. This, ladies and gentlemen, is volatility for you!
Take a look at their earnings press release and also earnings call transcript. I got a sense that Q2 will be another tough quarter, but sailing should be smoother in the second half. Be prepared for a bumpy ride for the next few months. On the bright side, some positive outlook they've given include 3.0 GW capacity by end of 2012 and cost per watt down in the $0.52 to $0.63 range by 2014. This means their capacity would be doubled of what it is today in about 18 months. In the meantime, I am planning on selling a naked put and maybe also buying some shares (both are bullish positions).
Take a look at their earnings press release and also earnings call transcript. I got a sense that Q2 will be another tough quarter, but sailing should be smoother in the second half. Be prepared for a bumpy ride for the next few months. On the bright side, some positive outlook they've given include 3.0 GW capacity by end of 2012 and cost per watt down in the $0.52 to $0.63 range by 2014. This means their capacity would be doubled of what it is today in about 18 months. In the meantime, I am planning on selling a naked put and maybe also buying some shares (both are bullish positions).
Wednesday, April 27, 2011
A Flurry of Activity
For those of you who don't know, I publish all of my trades on this page. I don't show the number of shares, but I do show the price at which I bought/sold. Recently, I've been busy buying and selling and my broker is loving it. I've bought shares of Google (GOOG), First Solar (FSLR), Synaptics (SYNA), and sold some True Religion (TRLG) and Garmin (GRMN). On the options side, I've sold uncovered puts for TRLG and SYNA, as I'm bullish on the stocks and wouldn't mind owning some more shares even if they got exercised. As well, I sold some covered calls on TRLG, because I felt that the recent run up could lose some steam. I could be wrong and the shares could be called away, but only after a 28% gain! Either case, I'm a happy man!
I still haven't written about my case for Synaptics, but I hope to do it sometime within the next 2 weeks. It just had a pretty impressive quarter and I'm hyped about this company.
I still haven't written about my case for Synaptics, but I hope to do it sometime within the next 2 weeks. It just had a pretty impressive quarter and I'm hyped about this company.
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